I'm starting to think Mr. Huang is going to have to enter the big March conference by levitating, just to get the market's attention.
The stock ended the regular session down $11.13 (-8.48%) at $120.15.
TheStreet (and the Street) is laying the selling pressure off to margin compression as the new chips roll out in size but the market action looks more like something between satiation and anhedonia.
From TheStreet, February 27:
Nvidia is trading lower Thursday even after reporting stronger-than-expected quarterly earnings.
The Santa Clara, Calif., AI-chip giant (NVDA) posted fiscal-Q4 revenue of $39.3 billion, a 78% surge from the year-earlier period. But growth slowed from the 265% the company posted a year earlier.
Fourth-quarter revenue from its key data-center segment, which provides chips and processors that power AI computing for megacap clients like Microsoft (MSFT) and Amazon (AMZN) , was a record $35.6 billion, up 93% from a year earlier. But again, the growth was slower than the 409% surge seen a year earlier.Nvidia expects current-quarter revenue around $43 billion, a year-to-year increase of about 65%.
"The demand for Blackwell is extraordinary. AI is evolving beyond perception and generative AI into reasoning," Nvidia CEO Jensen Huang said.
But keeping up with that demand is starting to pressure the company's profit margins.
Gross-profit margin is Nvidia's problem
Nvidia reported a non-GAAP 73.5% gross margin for the quarter, 3.2 points narrowed from a year earlier. The company attributed the narrower figure to newer data-center products that were more complicated and costly."Initially, we are focused on expediting the manufacturing of Blackwell systems to meet strong customer demand as they race to build out Blackwell infrastructure," Nvidia's chief financial officer, Colette Kress, said during the earnings call.
"When fully ramped, we have many opportunities to improve the cost, and gross margin will improve and return to the mid-70s late this fiscal year."
UBS analyst Timothy Arcuri commented that "the biggest nit might be gross margin, which was guided a little below expectations."
"However, we think this is entirely due to a big shift in mix in the April quarter, where Blackwell should be >60% of revenue and the company recommitted to being back in the mid-70s by year-end," the analyst added. He reiterated a buy rating and $185 price target on Nvidia stock....
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On the other hand Observer jumps ahead to what will most likely be a theme for the next twelve - fifteen months and/or until Blackwell's replacement is rolling off TSMC's assembly lines. February 27:
A.I. agents may be all the rage right now, but Nvidia (NVDA) CEO Jensen Huang is already looking beyond the hype. A.I.’s next phase will be “physical A.I.,” he said during Nvidia’s fourth-quarter earnings call yesterday (Feb. 26). Physical A.I. is a form of A.I. systems that can interact directly with the real world and encompasses products like autonomous vehicles and robots.
“Now is the beginning of the agentic A.I. era, and you hear a lot of people talking about it. Then, there’s physical A.I. after that,” Huang told analysts. He went on to explain, “They can’t just understand the meaning of words and languages, but they have to understand the meaning of the world, friction and inertia, object permanence and cause and effect.”
To this effect, Nvidia in January unveiled a platform of “world models,” which attempt to simulate real-world environments. Known as Cosmos, the new platform promises to advance the training of physical A.I. systems by providing highly realistic virtual worlds. Self-driving cars, for example, could be tested across various simulated weather conditions, while robotics companies could examine the safety of their products in different scenarios.
Cosmos has already been adopted by robotics companies like 1X and Neura Robotics and autonomous vehicle makers like Waabi and Wayve. The platform is also working with Uber (UBER) as it explores robotaxi products, Nvidia’s chief financial officer Colette Kress said yesterday. “Just as language foundation models have revolutionized language A.I., Cosmos is a physical A.I. to revolutionize robotics,” she added....
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We will once again refer our readers to the transcript of yesterday's conference call for a deeper dive into these and many other topics:
Nvidia Q4 2025 Earnings Call Transcript (NVDA)
In addition the round-up that Yahoo Finance did this morning is instructive:
"Nvidia posts earnings beat, but future margins are a 'little concerning': What Wall Street is saying" (NVDA)Possibly related:
The Week Ahead--"How to Gird Up Your Loins: An Illustrated Guide"
Although we don't plan a Dress & Grooming column, this may come in handy should the markets descend into madness....
